Q: Does new Treasury purchase program represent a "ramping up" of policy now that Fed will be expanding balance sheet again? Also, what evidence is needed to slow the pace of purchases?

Bernanke says this is more of a continuation of what was introduced in September. "That's what we've done today is simply followed through on what we said we would do in September."

Bernanke says what is important is portfolio rebalancing channel, wherein the Fed is removing safe securities from the market and forcing investors into riskier assets. That's where the additional stimulus comes from.

Bernanke says Fed is prepared to vary the amount of monthly bond purchases as new economic data becomes available.

Bernanke says the Fed doesn't have the tools to offset the fiscal cliff.

Q: What does framework set up today say about the Fed's exit strategy?

Bernanke says FOMC doesn't have a precise estimate on the long term stable unemployment rate. Their estimates are 5.2-6.0 percent.

Bernanke says removal of accomodation would be relatively gradual after the economy reaches the takeoff point.

Bernanke says the path these numbers are based on assumes an increase in rates occurring sometime after employment falls to 6.5 percent, but does not necessarily assume raising rates quickly after that.

Assuming inflation remains well-controlled, increase in rates would be moderate.

Q: Would postponing all fiscal consolidation be preferable to going over the cliff? Also, how did FOMC set their thresholds today?

Bernanke says he is "hoping Congress will do the right thing on the fiscal cliff."

He says it's in the best interest of the economy to come to a two-part solution: modify fiscal policy in a way that doesn't introduce economic headwinds in the near term, but also takes steps toward a framework of a sustainable path of fiscal policy. Those are equally important, says Bernanke.

Bernanke says threshold numbers are based on substantial analysis by Fed staff. It deals with correlations between the path of interest rates.

Q: Were there concerns about things happening in a "big hurry" in the bond market?

Bernanke says that wasn't an important motivation for adding more transparency to Fed communications, but that it was a positive effect of more transparency that markets would be able to read the situation better.

Q: In the path Yellen laid out a few weeks ago, it showed rates rising in 2016. Is that path the Fed is following?

Bernanke says the kind of path Yellen showed is indicative of the kinds of analysis the Fed has done. The general character of that interest rate path – i.e., that it stays low until unemployment is at 6.5 percent or lower, then rises steadily thereafter – is consistent with the analysis that was informative in the FOMC discussion.

Bernanke says the FOMC will include in statements on a regular basis its views on where inflation is expected to be a year from now. Further, it's important for FOMC projections to remain credible.

Bernanke's expectations are that the FOMC's projections will be consistent with those of the public.

Q: Why is the Fed not announcing additional measures to reduce unemployment, even though it's made its importance more explicit than ever today?

Bernanke says that is what the Fed did at the September meeting, and from that perspective, the Fed has taken significant additional action to provide support for the recovery and job creation.

Bernanke says the Fed is trying to balance the benefits of lower unemployment against the reality that as the Fed balance sheet expands, there are greater costs that go along with that which need to be taken into account.

Q: Is the message to the unemployed that the Fed is doing all it can?

Bernanke says the Fed's projections are made up of 19 different individual forecasts. However, it is true that if "we could wave a magic wand" and lower unemployment to 5 percent tomorrow, they would do it.

Q: How helpful would it be to see as part of the fiscal cliff resolution some near-term stimulus?

Bernanke says he tries to be careful to not give views on specific tax and spending programs. "At a minimum, Congress should try to do no harm...that's the critical thing."

Given that basic recommendation, Bernanke says, Congress can consider something a little bit more expansionary in the short term, but those are judgments Congress has to make – can they do that and maintain credibility that they can address structural deficits in the long term?

Q: Can the Fed, by tying policy to unemployment, go against the conventional view that central banks can't affect unemployment in the long run?

Bernanke says the central bank cannot control unemployment in the long run, with a caveat: very extended periods of unemployment can interfere with the workings of the labor market, so that if the Fed stayed away, it could have negative effects on long-term unemployment.

Bernanke says the 6.5 percent threshold is not a target, but a guidepost of when the beginning of reduction of accomodation could begin. It could be later than that, but at least not until that time.

It's more like a reaction function in that it relates policy to observables on the economy. It has no implication that the Fed can affect the long-term unemployment rate.

Q: What does the Fed hope changes in the economy as a result of this announcement?

Bernanke says by using the thresholds, the Fed is more transparent about what will determine future Fed policy. The date-based guidance had the problem that whenever the economic outlook changed, the Fed had to weigh changing the date-based guidance.

Bernanke says the new guidance will act as an automatic stablizer, because if the economy worsens, it will tend to lower long term rates, which will help boost the economy.

Q: Would you stay on past 2014 if asked?

Q: Is there logic in going to a chained CPI? Also, what is happening in the job market right now?

Bernanke says the chained CPI is technically better than fixed-weight CPI according to most economists because it allows for changes in the mix of goods and services that people consume more effectively.

Bernanke says neither may necessarily be a good measure of the cost of living for Social Security recipients, so those are the kinds of questions Congress will have to deal with.

Bernanke says it's true that part of the decline in unemployment has come from declines in participation rates. Some of that decline appears to be due to longer run factors like aging and change in working patterns among women.

Bernanke says it may be that the labor market is weaker than the current unemployment rate suggests, although there has been an improvement since the trough.

Q: Is the spread between mortgage borrowing rates and MBS yields widening?

Bernanke says while the Fed doesn't expect 100 percent pass through from the latter to the former, over time, the great majority of decline in MBS yields does get passed through to mortgage borrowing rates.

Bernanke says there has been a significant decline since September in retail mortgage rates. However, there are other things in the economy affecting those spreads.